Australian Dollar Hits 12-Week High Amid Rate Hike Expectations

The Australian dollar held steady near its 12-week high on Thursday, driven by expectations of an imminent rate hike. The currency rose 0.2% to $0.7184, after hitting a peak of $0.7189 overnight. However, it faces resistance at $0.7200 and $0.7277, while support lies around $0.7110 and $0.6920.

Australia's household spending jumped 1.1% in July, according to data released on Thursday, indicating that consumer demand remained resilient despite higher borrowing costs. This added to a hot inflation report on Wednesday, which had swap markets pricing a rate hike from the Reserve Bank of Australia (RBA) next month at a 53% probability.

Citi and National Australia Bank have both forecast a rate hike in September, citing resilient household spending and persistent inflation. The RBA held interest rates steady at 4.35% for a second meeting this month after three rate hikes this year, but policymakers have warned of even higher rates if inflation risks materialise.